(This is an excerpt from an article I originally published on Seeking Alpha on June 3, 2014. Click here to read the entire piece.)
Last year, I wrote a series of articles expressing my skepticism about the notion that an abandonment of homes by incapacitated Baby Boomers would cause America’s next housing crisis (for example, see “Baby Boomers Are Not Likely To Cause the Next Housing Crisis (Part 1)“). The somber picture promoted by demographer Arhtur C. Nelson, scheduled to begin around 2020, features desperate Baby Boomers living in homes they can no longer maintain in areas of the country suddenly unattractive to the newest generations – primarily far flung suburbs full of over-sized McMansions. The resulting exodus in turn applies additional downward pricing pressure on the homes in the community motivating yet more aging residents to run while they are still able.
I use three recent articles with data points that appear to support my counterpoint and underlying case that boomers are making sound plans around their housing options, have a diverse set of interests, and maintain strong desires to stay connected to friends and family. Moreover, their financial decisions may shift the economic landscape, but they will not likely cause the next housing crisis.
House Rich, Cash Rich
On June 1st, 2014, Bloomberg published an article called “Cash Deals for Homes Reach Record With Boomers Retiring” that suggests at a minimum that doomsday for Baby Boomers and their former communities will not start on time.
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Optimistic Baby Boomers Looking Forward to the Future, Not Dreading It
The Bloomberg article quotes an interesting March, 2014 survey of 1000 adults aged 49 to 67 (margin of error of +/- 3.1%) by Better Homes and Garden Real Estate described in a press release titled “Better Homes and Garden Real Estate Finds 70 Percent of Boomers Expect the House They Retire In to Be Their Best.” This kind of optimism is exactly what Nelson described as completely unrealistic. I find the results interesting in that they defy the notion that the move of Baby Boomers will trigger a housing crisis.
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Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on June 3, 2014. Click here to read the entire piece.)
Full disclosure: no positions